7. Long-Term Debt

Expected future minimum principal payments under our debt obligations are as follows: $125.0 million in fiscal year 2013; $250.0 million in fiscal 2015; and $475.0 million in years thereafter.

In March 2008, Patterson issued fixed-rate senior notes with an aggregate principal amount of $450 million, consisting of (i) $50 million 4.63% senior notes, due fiscal 2013; (ii) $250 million 5.17% senior notes, due fiscal 2015; and (iii) $150 million 5.75% senior notes, due fiscal 2018.

Also in March 2008, we entered into a term loan agreement with a principal amount of $75 million, which matures in fiscal 2013. The term loan bears interest at a floating rate based on LIBOR plus a spread that can range from 0.50% to 1.25% based on our leverage ratio, as defined in the agreement. During the years ended April 28, 2012 and April 30, 2011, the weighted average interest rate of this term loan was 1.20% and 1.11%, respectively.

In December 2011, we issued fixed-rate senior notes with an aggregate principal amount of $325 million, consisting of (i) $60 million 2.95% senior notes, due fiscal 2018; (ii) $165 million 3.59% senior notes, due fiscal 2021; and (iii) $100 million 3.74% senior notes, due fiscal 2023.

A portion of the proceeds from the issuance of debt in December 2011 was used to repurchase shares of our common stock and to repay borrowings under our revolving line of credit. The remaining proceeds are intended to retire the senior note and term loan due fiscal 2013, or will be used for general corporate purposes. Debt issuance costs associated with the issuance of debt in March 2008 of $1.8 million and in December 2011 of $1.8 million are being amortized to interest expense over the life of the related debt.

In addition, in March 2008 we entered into two forward starting interest rate swap agreements, each with notional amounts of $100 million and accounted for as cash flow hedges, to hedge interest rate fluctuations in anticipation of the issuance of the 5.17% senior notes due fiscal 2015 and the 5.75% senior notes due fiscal 2018, respectively. Upon issuance of the hedged debt, Patterson settled the forward starting interest rate swap agreements and recorded a $1.0 million increase, net of income taxes, to other comprehensive income, which is being amortized against interest expense over the life of the related debt. The pre-tax amount reclassified into earnings during fiscal years 2012, 2011 and 2010 was $0.2 million. The amount expected to be reclassified into earnings during fiscal 2013 is also expected to be $0.2 million.

Patterson has available a $300 million revolving credit facility through December 2016. Interest on borrowings is based on LIBOR plus a spread which can range from 1.125% to 1.875%. This spread as well as a commitment fee on the unused portion of the facility are based on our leverage ratio, as defined in the agreement. There were no outstanding borrowings under the facility at April 28, 2012 or April 30, 2011.

The debt agreements contain various financial covenants including certain leverage and interest coverage ratios as defined in the agreements. Patterson met the financial and nonfinancial covenants under the debt agreements as of April 28, 2012.

Patterson’s debt consists of the following (in thousands):


	April 28, 2012		April 30, 2011
4.63% senior notes due fiscal 2013	$	50,000	$	50,000
5.17% senior notes due fiscal 2015		250,000		250,000
5.75% senior notes due fiscal 2018		150,000		150,000
2.95% senior notes due fiscal 2018		60,000		0
3.59% senior notes due fiscal 2021		165,000		0
3.74% senior notes due fiscal 2023		100,000		0
Variable rate (LIBOR plus 1.25%) term loan due fiscal 2013		75,000		75,000

Total debt		850,000		525,000
Less: current debt obligations		125,000		0

Long-term debt	$	725,000	$	525,000